L&G 2002 Final Results Pt4

Legal & General Group PLC
27 February 2003


Part 4
Legal & General Investment Management
- supplementary information

Profits - MSS basis

In another successful year, profits from institutional fund management grew 22%
to £50m (2001: £41m).

Despite the falls in global equity markets during 2002, corporate pensions
produced an unchanged operating profit of £34m. Revenue growth benefited from
record new business levels of £13.4bn (2001: £13.2bn) together with a modest
increase in average pooled fund fee rates. Although the number of pension fund
clients rose by 8% to 2,220, rigorous cost management ensured that the
associated expenses grew by only 4% year on year. Our growing client-base of
index-tracking customers provides an opportunity to cross-sell higher fee rate
actively managed products.

The Property fund management subsidiary achieved further external asset growth
in 2002, leading to enhanced profitability. External property partners new
business was £159m during the year and external property funds under management
now total over £1bn.

Legal & General Ventures, the private equity arm, achieved an increased profit
of £5m (2001: £3m). Over the year, it made three new investments and
successfully completed three realisations.

Total funds under management increased to £114bn (2001: £113bn), despite a 25%
fall in the FTSE All Share index. The stability of funds under management
reflected both £14bn of gross new funds won and a 42% exposure to fixed
interest, property and cash in the funds under management.

Profits - Achieved Profits basis

Managed pension funds business is written as a long term contract and so the
results of the business are also presented on an Achieved Profits basis. The
embedded value assumptions are detailed in Part 2 of this announcement.

Institutional fund management business profits increased by 21% to £92m (2001:
£76m) of which managed pension funds represented £83m (2001: £70m). The new
business contribution from managed pension funds increased by 19% to £32m (2001:
£27m) reflecting changes in the mix of business. The contribution from in-force
business was unchanged at £45m.

Fund Performance

Legal & General Investment Management delivered good investment performance
across its range of funds in 2002. All index funds met their tracking
parameters. The majority of actively-managed funds outperformed their benchmark
or peer group median. Performance in Fixed Interest was particularly strong: the
Corporate Bond pensions managed fund was the top performing fund in its peer
group in the three years to end-2002, and our flagship retail funds, the Fixed
Interest Trust and the High Income Trust, delivered top quartile performance.

Part 4
Legal & General Investment Management                                                                             P1
Consolidated Profit and Loss Account
- Modified Statutory Solvency basis
Year ended 31 December 2002
--------------------------------------------------------------------------------------------------------------------
                                                                                           2002                 2001
                                                                                             £m                   £m
Profit on continuing operations
Corporate pensions                                                                           34                   34
Ventures                                                                                      5                    3
Property                                                                                      2                    1
Other external income                                                                         1                    0
Other operational income                                                                      8                    3
                                                                                ---------------      ---------------
Profit on ordinary activities before tax                                                     50                   41
Tax charge on profit on ordinary activities                                                 (14)                 (11)
                                                                                ---------------      ---------------
Profit for the financial period                                                              36                   30
                                                                                ===============      ===============

These financial statements were approved by the Group Board on 26 February 2003
and have been prepared for long term business using the Modified Statutory
Solvency basis. The Achieved Profits results are included in page 4.

The results constitute non statutory accounts within the meaning of Section 240
of the Companies Act 1985 and are extracted from the Group's financial
statements for the year ended 31 December 2002. The Group's financial statements
include the auditor's unqualified report and do not contain a statement under
either Sections 237(2) or 237(3) of the Companies Act 1985.

====================================================================================================================
Legal & General Investment Management                                                                             P2
Funds under management
Year ended 31 December 2002
--------------------------------------------------------------------------------------------------------------------
                                                                                    At 31.12.02          At 31.12.01
                                                                                             £m                   £m
Total investments                                                                       113,992              113,248
                                                                                ===============      ===============
Represented by
Index tracking funds:
- UK equities                                                                            35,940               40,037
- Overseas equities                                                                      17,999               18,595
- Fixed interest                                                                         15,107               13,090
- Index linked                                                                            7,481                6,376
- Cash/deposits                                                                             328                  157
                                                                                ---------------      ---------------
Total index tracking funds                                                               76,855               78,255
Actively managed funds                                                                   37,137               34,993
                                                                                ---------------      ---------------
                                                                                        113,992              113,248
                                                                                ===============      ===============
By fund management approach
Indexed equities                                                                         53,939               58,632
Active bonds (including index linked funds)                                              25,035               21,480
Indexed bonds (including index linked funds)                                             22,916               19,623
Active equities                                                                           6,526                8,357
Property                                                                                  5,137                4,673
Private equity (ventures)                                                                   439                  483
                                                                                ---------------      ---------------
                                                                                        113,992              113,248
                                                                                ===============      ===============
By source of business
Institutional funds under management*:
- Managed pension funds pooled                                                           60,397               61,674
- Managed pension funds segregated                                                        6,308                5,130
- Other                                                                                   2,662                2,430
                                                                                ---------------      ---------------
Total institutional funds under management                                               69,367               69,234
UK Operations (unit trusts - excluding life fund investment)                              5,094                4,507
UK Operations (life and general insurance funds)                                         39,531               39,507
                                                                                ---------------      ---------------
                                                                                        113,992              113,248
                                                                                ===============      ===============
* excludes institutional investments in unit trust funds
====================================================================================================================

Legal & General Investment Management                                                                             P3
New business
Year ended 31 December 2002
--------------------------------------------------------------------------------------------------------------------

                                                                                           2002                 2001
New business                                                                                 £m                   £m
Managed pension funds*
- Pooled funds                                                                           12,359               10,608
- Segregated funds                                                                        1,039                2,571
                                                                                ---------------      ---------------
                                                                                         13,398               13,179
Other funds                                                                                 569                   40
                                                                                ---------------      ---------------
                                                                                         13,967               13,219
                                                                                ===============      ===============
By fund management approach
Active equities                                                                            0.1%                 0.2%
Active bonds (including cash)                                                              0.5%                 0.4%
Indexed equities                                                                          73.0%                65.5%
Indexed bonds (including cash)                                                            25.0%                33.6%
Property                                                                                   1.1%                 0.2%
Private equity                                                                             0.3%                 0.1%
                                                                                ---------------      ---------------
                                                                                         100.0%               100.0%
                                                                                ===============      ===============

* New monies from pension fund clients of Legal & General Assurance (Pensions
Management) Ltd.

Other includes segregated property, property partnerships, ventures and
institutional clients excluding trusts.

Corporate pensions gross new business excludes £2,068m (2001: £2,546m) of money
which is held on a temporary basis, generally as part of a portfolio
reconstruction.
====================================================================================================================

Legal & General Investment Management                                                                             P4
Consolidated Profit and Loss Account
- Achieved Profits basis
Year ended 31 December 2002
--------------------------------------------------------------------------------------------------------------------

                                                                                           2002                 2001
Profit on continuing operations                                                              £m                   £m
Managed pension funds:
Contribution from:
New business                                                                                 32                   27
In-force business
- expected return                                                                            15                   14
- expected variances                                                                         14                   20
- operating assumption changes                                                               16                   11
Development costs                                                                            (1)                  (2)
Shareholder net worth                                                                         7                    -
                                                                                ---------------      ---------------
Total                                                                                        83                   70
Ventures                                                                                      5                    2
Property                                                                                      2                    1
LGIM                                                                                          2                    -
Other operational income                                                                      -                    3
                                                                                ---------------      ---------------
Operating profit from institutional fund management                                          92                   76
Variation from longer term investment return*                                               (48)                 (31)
                                                                                ---------------      ---------------
Profit on ordinary activities before tax                                                     44                   45
Tax charge on profit on ordinary activities                                                 (12)                 (14)
                                                                                ---------------      ---------------
Profit for the financial period                                                              32                   31
                                                                                ===============      ===============

*The variation from longer term investment return represents the effect of the
investment performance in respect of shareholder net worth and in-force
business, compared with embedded value assumptions at the beginning of the
period.

Managed pension funds embedded value
                                                                                           2002                 2001
                                                                                             £m                   £m
At 1 January                                                                                252                  134
Profit after tax                                                                             25                   26
Distributions and capital movements                                                         (15)                  92
                                                                                ---------------      ---------------
At 31 December                                                                              262                  252
                                                                                ---------------      ---------------
comprising:
Value of in-force business                                                                  132                  136
Shareholder net worth                                                                       130                  116
                                                                                ---------------      ---------------
                                                                                            262                  252
====================================================================================================================



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